SunEdison Junior Creditors to Conduct Bankruptcy Probe
May 20 2016 - 1:40PM
Dow Jones News
Troubled solar power developer SunEdison Inc. has agreed to
allow its unsecured creditors to take on the role of bankruptcy
investigators, probing for grounds for potential lawsuits against
directors, officers and others involved in its troubles.
Announced at a bankruptcy court hearing in New York, the
agreement was reached in talks about SunEdison's finance package,
which was under attack from junior creditors wary of allowing the
company to go even deeper in debt.
SunEdison was carrying $16 billion in debt when it filed for
chapter 11 bankruptcy protection in April and under investigation
by the Securities and Exchange Commission and the Justice
Department.
The bankruptcy followed a precipitous loss of market confidence
and value in the company, which grew quickly by way of financial
engineering to become one of the world's largest launchpads for
alternative power projects.
Questions about its finances arose last year and have yet to be
answered. SunEdison said an internal investigation showed no
intentional wrongdoing, but the company hasn't yet filed audited
financial statements for 2015.
The settlement creates a $10 million war chest for the official
committee of unsecured creditors to investigate SunEdison. The
point of the probe will be to find whether there is evidence to
support lawsuits against the company's leaders and "others," said
Arik Preis, lawyer for a group of SunEdison lenders.
The committee investigation will replace a probe SunEdison
requested, one that creditors contended was too limited in scope
and budget.
In addition, SunEdison's bankruptcy financiers, which are also
the company's senior lenders, agreed to free up for junior
creditors up to $50 million of insurance coverage available under
the company's officers and directors liability insurance
coverage.
SunEdison lawyer Jay Goffman said the agreement that will clear
the way to bankruptcy financing could be a first step toward a deal
on a chapter 11 turnaround plan for the company. Mr. Goffman also
said the agreement to let creditors investigate and possibly sue
SunEdison's leaders isn't an admission that there are viable legal
claims against them.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
May 20, 2016 13:25 ET (17:25 GMT)
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